Abstract
This paper investigates market reaction to earnings announcements made by public family firms, to see whether these announcements affect a firm's returns, liquidity or cost of capital. We apply an event study and panel data approach to a sample of Portuguese firms listed between 2000 and 2013. Overall, we find no support for the earnings-signalling hypothesis. Firm size and the fact that a Big-4 company audits a firm contribute positively to the firm performance. The results show no significant relationship between earnings changes and firm liquidity or the weighted average cost of capital and, as such, do not support the pecking order theory. Finally, we find no significant differences between family and non-family firms as regards performance, liquidity and cost of capital. This study is of interest to scholars and practitioners in the field of finance, particularly those focusing on the information content of earnings announcements and the differences between the effects of earnings announcements made by listed family and non-family firms.
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